Industrial restructuring and changing world metallurgical coal trade patterns

"Major industrial restructuring, which started to manifest itself in the mature economies of the Western World and Japan in the 1970s, will accelerate in the 1980s and 1990s. Conventional heavy manufacturing industries will continue to lose ground to lighter processing/assembly operations and the new wave of high technology, information and service sectors. The decline in heavy manufacturing has severely impacted on the steel industries of Western Europe, the U.S.A . and Japan.World trade in metallurgical coal has shifted correspondingly, with declining demand in the mature developed countries being only partially offset by large increases in the steel intensity of the newly-industrialized countries (NICs) of the Far East, Latin America and, to a more limited extent, the Middle East and Africa. These trends will be accentuated in future years with direct implications for the distribution of metallurgical coal trade. This paper discusses, in quantitative terms, such changes in the 1980s and 1990s, and examines the implications for, and impacts on, Canadian metallurgical coal exporters.IntroductionThe twenty-year period from the early 1950 s to the early 1970s was characterized by inexorable growth in consumer demand and industrial expansion in most of the advanced countries of the western world. Long- term forecasting during this period typically used linear extrapolation techniques which , despite their simplicity, invariably ended up predicting future demand and production level s with uncanny accuracy. Times have changed!The last decade has been characterized by a n abysmal failure of our economies to respond to simple long-term, linear growth patterns. We appear to have entered a new world in transition, where we can observe a wave of dying or sunset industries reluctantly being submerged by a wave of emerging or sunrise industries.This paper is aimed a t examining the evidence for long-term industrial restructuring trend s. For want of a better word, these so -called, megatrends are then used to predict future demand level s and spatial distribution of steel development and , hence, metallurgical coal trade. It is tempting to correlate the decline in economic activity in the western world with the first Organization of Petroleum Exporting Countries' (OPEC) crisis of 1973. This crisis was probably no more than the straw that broke the camel's back, as the megatrends and embryo s of major industrial restructuring were already evident. Today these megatrends are merely more apparent and transparent than they were ten years ago.While the concept of industrial restructuring is the new economic buzz word, the process was at work, to a lesser degree even throughout the period of strong economic growth of the post-Second World War boom. Many people still remain convinced that our present-day sluggish economy is just part o f the typical , though rather more prolonged, recessionary cycle. Yet, we have always been part of a dynamic economic system and industry throughout history has been the subject of a continuous process of evolution, restructuring and reconstitution . Now the time is ripe to examine the evidence for such restructuring in order to develop coherent policies of adjustment in this transition from one industrial regime to another."